A New Mexico court of appeals recently held that a former employee could not be permanently enjoined from disclosing trade secrets because his employment agreement provided for a five-year limit on the duty of confidentiality.

Lasen, Inc. (“Lasen”), a company that uses trade secret helicopter-mounted LIDAR imaging technology to detect methane gas leaks in natural gas pipelines, sued a former research scientist who wrote the source code for the company’s signature technology. Lasen alleged that the former employee stole the source code and other crucial information as well as deleted Lasen’s copies following his termination in 2009. As a result, Lasen was unable to update its LIDAR technology because it could not decipher the source code. Lasen also alleged that the former employee used its trade secrets in seeking employment with a direct competitor. After a bench trial, the court found the former employee did not misappropriate Lasen’s trade secrets, but he did breach his fiduciary duty and wrongfully retained intellectual property and trade secrets that belonged to Lasen. Therefore, the court permanently enjoined the former employee from disseminating or retaining any of Lasen’s trade secrets (the parties had stipulated that the source code was trade secret).
Continue Reading Permanent Injunctions Restricting Use of Trade Secrets May Only Be as Permanent as an Employment Contract’s Provisions

The Southern District of California recently confirmed that the California Uniform Trade Secrets Act (“CUTSA”) does not preempt other civil claims to extent they are based on wrongful conduct relating to non-trade secret intellectual property.

The case involves an employee leaving a company and allegedly commercializing its trade secret with a competitor. Defendant Mr. Corey was an original co-founder of Plaintiff Javo – which sold coffee, tea, and botanical extracts. He played a key role in developing Javo’s proprietary process for making extracts. The process involved using a specially made extraction vessel and particular levels of water quality, temperature and pressure. In 2011, as a result of Chapter 11 bankruptcy proceedings, Javo terminated Mr. Corey’s employment. Importantly to this case, his employment agreement had included an assignment of all his rights and interests in any trade secrets to Javo.

Mr. Corey went on to work for the Defendant, California Extraction Ventures (“CEV”). Shortly thereafter, Mr. Corey filed patent applications disclosing some of Javo’s allegedly proprietary information, including purported trade secret information, as well as other confidential (but not trade secret) information. Rather than assign the patent applications to Javo, Mr. Corey assigned them to CEV, his new employer. Eventually seven patents issued, and seven additional applications were published.
Continue Reading CUTSA Does Not Preempt Contractual Interference Claim Based on Confidential (But Not Trade Secret) Information

On September 23rd, 2019, the District Court for the District of Colorado awarded Atlas Biologicals, Inc. a total of $2 million against Defendant Thomas Kutrubes and his company, Peak Serum, Inc. Kutrubes, a part owner and former employee of Atlas, was found liable for trademark infringement, misappropriation of trade secrets, and breach of fiduciary duty.

In the First Circuit, restrictive covenants are governed predominately by statute (with the exception of Puerto Rico, which governs such agreements through common law). Within the last year, Maine, Rhode Island, and New Hampshire have amended their restrictive-covenant statutes to prohibit employers from requiring lower-wage earners to sign noncompete agreements. A recently proposed amendment to Massachusetts law, if passed, would render all noncompetition agreements void and unenforceable effective January 1, 2021. These efforts reflect increasing hostility towards, and increased scrutiny of, restrictive covenants in the First Circuit.

Continue Reading Restrictive Covenants in the First Circuit

As in other states, the enforceability of restrictive covenants or non-compete clauses in the Sixth Circuit turns primarily on the reasonableness of the restriction’s geographic and temporal scope. Michigan has enacted a statute explaining when non-competes may be enforced. In Kentucky, Ohio and Tennessee, enforcement is determined entirely by common law. In Ohio and Tennessee, courts will consider the public interest in addition to the interests of the parties involved.

Continue Reading Restrictive Covenants in the Sixth Circuit

A recent International Trade Commission (ITC) case shows that, although rarely used, the ITC remains a viable option for parties pursuing trade secret misappropriation claims. Trade secret claims can be brought under Section 337(a)(1)(A)’s catch-all for other “unfair methods of competition and unfair acts in the importation of articles”—often called “non-statutory” claims—and can result in

States within the Fourth Circuit vary in their enforcement of restrictive covenants. Virginia, Maryland, and South Carolina govern the use of restrictive covenants through common law while North Carolina governs through statute. Despite the variations in governing authority, many of the factors used in these states will be familiar, given the widely accepted “reasonableness” standard

Huawei Technologies Co., the world’s largest telecommunications company, and CNEX Labs Inc. went to trial this week in the U.S. District Court for the Eastern District of Texas over dueling allegations of trade secret theft relating to semiconductor chip technology behind solid-state drives. Huawei Technologies Co. Ltd. et al v. Huang et al, No.

As in most states, the enforceability of restrictive covenants or non-compete clauses in the Fifth Circuit turns primarily on the reasonableness of the restriction’s geographic and temporal scope. Louisiana and Texas have enacted statutes explaining when non-competes may be enforced. But in Mississippi, enforcement is determined entirely by common law, and courts will consider the

On May 10, 2019, the Delaware Chancery Court issued an opinion adopting a “narrow approach” in interpreting Section 1030(a)(2)(C) of Computer Fraud and Abuse Act (CFAA). Section 1030(a)(2)(C) imposes liability on a person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains… information from any protected computer.” 18 U.S.C. §